The quarter's performance reflects a troubling combination of revenue contraction and deteriorating profitability. Net sales in Q2 FY26 stood at ₹16.11 crores, declining 23.36% sequentially from ₹21.02 crores in Q1 FY26, though showing a modest 13.77% year-on-year improvement. The company's negative book value of ₹60.31 per share underscores deep-rooted balance sheet weakness, with shareholder funds at negative ₹133.88 crores as of March 2025.
Financial Performance: Revenue Volatility and Margin Compression
Shristi Infrastructure's financial performance in Q2 FY26 demonstrated significant volatility and operational stress. The company's net sales of ₹16.11 crores represented a sharp 23.36% quarter-on-quarter decline from ₹21.02 crores in Q1 FY26, indicating inconsistent project execution and revenue recognition patterns typical of the infrastructure and real estate sectors. On a year-on-year basis, revenue improved 13.77% from ₹14.16 crores in Q2 FY25, providing limited consolation given the sequential deterioration.
Operating profitability excluding other income collapsed to just 4.11% in Q2 FY26 from 7.33% in the previous quarter, reflecting margin compression of 322 basis points. The absolute operating profit (PBDIT excluding other income) contracted to ₹0.65 crores from ₹1.52 crores, a 57.24% sequential decline. This margin deterioration signals rising project costs, operational inefficiencies, or aggressive pricing to secure contracts in a competitive environment.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Consolidated PAT (₹ Cr) | YoY Change | Operating Margin (%) |
|---|---|---|---|---|---|
| Sep'25 | 16.11 | -23.36% | -5.19 | -47.68% | 4.11% |
| Jun'25 | 21.02 | -49.17% | -4.62 | -44.74% | 7.33% |
| Mar'25 | 41.35 | +120.89% | 3.76 | -74.75% | -117.81% |
| Dec'24 | 18.72 | +32.20% | -0.70 | — | -33.89% |
| Sep'24 | 14.16 | +9.85% | -9.92 | — | -20.74% |
| Jun'24 | 12.89 | -141.10% | -8.36 | — | -6.87% |
| Mar'24 | -31.36 | — | 14.89 | — | 95.72% |
The company's interest burden remained elevated at ₹3.90 crores in Q2 FY26, consuming a substantial portion of operating profits and contributing to the pre-tax loss of ₹3.26 crores. Despite the company's net cash position on an average basis (net debt to equity of -2.84), quarterly interest costs continue to weigh heavily on profitability, suggesting ongoing debt servicing obligations on long-term borrowings of ₹360.66 crores as of March 2025.
⚠️ Critical Concern: Negative Shareholder Equity
Shristi Infrastructure's shareholder funds stand at negative ₹133.88 crores as of March 2025, with reserves and surplus at negative ₹156.08 crores. This negative book value situation reflects years of accumulated losses and represents a fundamental solvency concern. The company has reported consistent annual losses since FY21, with FY25 posting a loss of ₹9.00 crores despite other income of ₹66.00 crores that temporarily improved results.
Operational Challenges: Eroding Capital Efficiency
The company's operational metrics paint a concerning picture of capital efficiency and return generation. Return on equity (ROE) averaged a meagre 0.33% over recent periods, indicating minimal value creation for shareholders from the deployed capital base. More critically, with the latest negative book value, ROE calculations become meaningless, highlighting the severity of the balance sheet distress.
Return on capital employed (ROCE) averaged negative 4.64%, with the latest reading at negative 23.70%, demonstrating the company's inability to generate adequate returns from its total capital base. This persistent negative ROCE, combined with a debt-to-EBITDA ratio averaging 37.50 times, illustrates the challenging operating environment and the burden of legacy debt obligations.
The company's sales to capital employed ratio averaged just 0.27 times, indicating that Shristi generates only ₹0.27 in sales for every rupee of capital employed. This low asset turnover ratio reflects either capital-intensive operations with long gestation periods or underutilised assets, both concerning for a company in the infrastructure development space.
Balance Sheet Stress Indicators
Long-term Debt: ₹360.66 crores (Mar'25), representing a substantial burden relative to the company's negative equity base. Current Liabilities: ₹259.68 crores, including trade payables of ₹11.73 crores and other current liabilities of ₹226.10 crores. Fixed Assets: ₹108.20 crores, showing minimal change from ₹108.27 crores in the previous year, suggesting limited capital expenditure or asset additions.
Industry Context: Structural Headwinds in Micro-Cap Realty
Shristi Infrastructure operates in India's highly fragmented and cyclical real estate and infrastructure development sector. The micro-cap segment of this industry faces particularly acute challenges, including limited access to capital, intense competition from larger, better-capitalised players, and vulnerability to regulatory changes and economic cycles.
The company's 5-year sales growth of negative 21.58% contrasts sharply with the broader real estate sector's recovery in recent years. While established real estate companies have benefited from strong housing demand and improving consumer sentiment, Shristi's declining revenue trajectory suggests market share losses, project delays, or strategic challenges in securing new business.
The infrastructure development business typically requires significant upfront capital, long project cycles, and effective working capital management. Shristi's negative working capital position and elevated debt levels have likely constrained its ability to bid for new projects or execute existing ones efficiently, creating a vicious cycle of declining revenues and mounting losses.
Peer Comparison: Underperformance Across All Metrics
| Company | P/E Ratio (TTM) | P/BV Ratio | ROE (%) | Debt to Equity | Dividend Yield |
|---|---|---|---|---|---|
| Shristi Infra | NA (Loss Making) | -0.54x | 0.33% | -2.84x | NA |
| Ansal Buildwell | 9.53x | 0.76x | 7.79% | 0.13x | 0.72% |
| Garnet Construct | 5.27x | 0.94x | 5.45% | 0.08x | NA |
| Dhansafal Fin | NA (Loss Making) | 1.58x | 2.86% | -0.10x | NA |
| Kretto Syscon | 13.14x | 1.11x | 2.16% | -0.04x | NA |
Shristi Infrastructure's peer comparison reveals significant underperformance across profitability and efficiency metrics. The company's ROE of 0.33% lags substantially behind peers like Ansal Buildwell (7.79%) and Garnet Construct (5.45%), indicating inferior capital allocation and operational execution. The negative price-to-book value of -0.54x reflects the market's recognition of the company's negative equity position, a unique situation even within this peer group.
While Shristi maintains a net cash position on average (negative debt-to-equity), this metric is misleading given the company's negative shareholder base. In reality, the company's debt burden relative to its operational capacity remains excessive, as evidenced by the high debt-to-EBITDA ratio of 37.50 times and persistent interest coverage challenges.
Valuation Analysis: Deep Distress Reflected in Price
At the current market price of ₹32.78, Shristi Infrastructure trades at a market capitalisation of just ₹73.00 crores, firmly in micro-cap territory. The stock's valuation metrics are largely meaningless given the company's loss-making status and negative book value. The P/E ratio is not applicable due to negative earnings, whilst the price-to-book value of -0.54x reflects the negative shareholder equity of ₹133.88 crores.
The company's enterprise value to EBITDA multiple of -8.64x and EV to EBIT of -8.63x are distorted by negative operating profits, making traditional valuation frameworks inapplicable. The EV to sales ratio of 4.67x appears elevated for a company with declining revenues and negative profitability, suggesting the market is pricing in significant distress and potential restructuring scenarios.
Shristi's valuation grade has deteriorated progressively, currently classified as "RISKY" since April 2023. The stock has declined 40.39% from its 52-week high of ₹54.99, with the current price of ₹32.78 trading just 14.02% above the 52-week low of ₹28.75, indicating sustained selling pressure and lack of investor confidence.
"With negative shareholder equity, persistent losses, and a debt burden that consumes operating profits, Shristi Infrastructure faces fundamental solvency challenges that traditional valuation metrics cannot adequately capture."
Shareholding: Absence of Institutional Support
| Shareholder Category | Sep'25 | Jun'25 | Mar'25 | Dec'24 | QoQ Change |
|---|---|---|---|---|---|
| Promoter Holding | 18.51% | 18.51% | 18.51% | 18.51% | 0.00% |
| FII Holding | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Fund Holding | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance Holdings | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Non-Institutional | 25.05% | 25.05% | 25.05% | 25.05% | 0.00% |
Shristi Infrastructure's shareholding pattern reveals a complete absence of institutional investor interest, with zero holdings from foreign institutional investors, mutual funds, and insurance companies. This lack of institutional participation reflects the company's poor financial performance, negative equity position, and limited liquidity, making it unsuitable for institutional portfolios with fiduciary responsibilities.
Promoter holding stands at just 18.51%, with Adishakti Commercial Private Limited holding the majority stake. This relatively low promoter stake, combined with the absence of any institutional investors, raises questions about governance, strategic direction, and the promoters' commitment to turning around the business. The shareholding pattern has remained completely static across recent quarters, indicating no buying or selling activity from any category of investors.
Stock Performance: Sustained Underperformance
| Period | Stock Return | Sensex Return | Alpha | Sector Return |
|---|---|---|---|---|
| 1 Week | +4.06% | +1.62% | +2.44% | — |
| 1 Month | +8.72% | +3.09% | +5.63% | — |
| 3 Months | -11.29% | +4.92% | -16.21% | — |
| 6 Months | -8.94% | +3.97% | -12.91% | — |
| YTD | -24.40% | +8.22% | -32.62% | — |
| 1 Year | -33.78% | +9.00% | -42.78% | +2.59% |
| 3 Years | +27.05% | +37.22% | -10.17% | — |
| 5 Years | -6.21% | +93.78% | -99.99% | — |
Shristi Infrastructure's stock performance reflects the company's deteriorating fundamentals and lack of investor confidence. Over the past year, the stock has declined 33.78%, massively underperforming the Sensex's 9.00% gain and the realty sector's 2.59% return. This 36.37 percentage point underperformance versus the sector highlights company-specific challenges rather than broader industry headwinds.
The stock's risk-adjusted returns paint an even grimmer picture. With a volatility of 67.12% over the past year and negative absolute returns of 33.78%, the risk-adjusted return stands at negative 0.50, placing it firmly in the "HIGH RISK LOW RETURN" category. The beta of 1.50 indicates the stock is 50% more volatile than the broader market, amplifying downside risk during market corrections.
Technical indicators universally signal bearish sentiment, with the stock trading below all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day). The current price of ₹32.78 sits 11.43% below the 200-day moving average of ₹37.02, indicating a sustained downtrend. MACD, RSI, and Bollinger Bands all flash bearish signals across weekly and monthly timeframes.
Investment Thesis: Fundamental Solvency Concerns
Shristi Infrastructure's investment thesis is fundamentally challenged by its negative shareholder equity, persistent losses, and deteriorating operational performance. The company's proprietary Mojo Score of just 12 out of 100 places it firmly in "STRONG SELL" territory, reflecting the confluence of poor quality metrics, risky valuation, flat financial trends, and bearish technical indicators.
The quality assessment categorises Shristi as "BELOW AVERAGE," driven by negative 5-year sales growth of 21.58%, deeply negative EBIT growth of 218.07%, and an average EBIT-to-interest coverage of just 0.47 times. This means the company's operating profits cover less than half of its interest obligations, a fundamentally unsustainable situation that explains the mounting losses.
✅ KEY STRENGTHS
- Recent Revenue Recovery: H1 FY26 sales at ₹37.13 crores grew 37.26% versus previous period
- Net Cash Position: Average net debt to equity of -2.84 indicates cash generation capability
- Debtors Management: Debtors turnover ratio of 11.50 times suggests efficient receivables collection
- Asset Base: Fixed assets of ₹108.20 crores provide some tangible backing
- Operational Presence: Established infrastructure development and construction business
⚠️ KEY CONCERNS
- Negative Equity: Shareholder funds at negative ₹133.88 crores indicate fundamental solvency risk
- Persistent Losses: Consecutive annual losses since FY21 with no clear path to profitability
- High Debt Burden: Long-term debt of ₹360.66 crores with debt-to-EBITDA of 37.50x
- Margin Compression: Operating margins collapsed from 7.33% to 4.11% in Q2 FY26
- Zero Institutional Support: Complete absence of FII, MF, and insurance holdings
- Revenue Volatility: Quarterly sales swings from ₹41.35 crores to ₹16.11 crores
- Poor Returns: ROE of 0.33% and ROCE of negative 23.70% demonstrate value destruction
Outlook: Critical Monitoring Points
📈 POSITIVE CATALYSTS
- Sustained revenue growth with consistent quarterly execution above ₹20 crores
- Operating margin improvement back above 10% indicating better project selection
- Debt restructuring or capital infusion to address negative equity position
- Return to profitability with positive PAT for consecutive quarters
- Institutional investor participation signalling improved governance and prospects
🚨 RED FLAGS
- Further deterioration in shareholder equity or inability to service debt obligations
- Revenue declining below ₹15 crores per quarter on sustained basis
- Operating margins remaining below 5% indicating structural unprofitability
- Promoter stake reduction or increased pledging of shares
- Working capital stress leading to delayed payments or project stoppages
- Continued absence of institutional investors despite turnaround efforts
The Verdict: Fundamental Distress Warrants Strong Sell
Score: 12/100
For Fresh Investors: Avoid completely. Shristi Infrastructure faces fundamental solvency concerns with negative shareholder equity of ₹133.88 crores, persistent losses, and deteriorating operational performance. The company's inability to generate adequate returns (ROE 0.33%, ROCE negative 23.70%) combined with a crushing debt burden makes this an extremely high-risk proposition unsuitable for any investment portfolio.
For Existing Holders: Exit positions at current levels or on any technical bounce. The company's negative book value, mounting losses, and complete absence of institutional support indicate deep structural challenges that may take years to resolve, if at all. The risk of permanent capital loss significantly outweighs any potential recovery scenario. Consider tax-loss harvesting opportunities.
Risk Assessment: EXTREME RISK. The combination of negative equity, high debt, operational losses, and zero institutional confidence creates a situation where solvency itself is questionable. Investors should recognise this as a distressed situation requiring fundamental restructuring.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. The analysis presented is based on historical data and current market conditions, which are subject to change. Past performance is not indicative of future results. Investments in micro-cap stocks carry significantly higher risks including liquidity risk, volatility, and potential for total capital loss.
